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Consolidated financial statements of Toronto District School Board August 31, 2015

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Page 1: Consolidated financial statements of - tdsb.on.ca District School... · Notes to the consolidated financial ... 2015 and the consolidated statements of ... the consolidated financial

Consolidated financial statements of

Toronto District School Board August 31, 2015

Page 2: Consolidated financial statements of - tdsb.on.ca District School... · Notes to the consolidated financial ... 2015 and the consolidated statements of ... the consolidated financial

Toronto District School Board August 31, 2015 Table of contents Management Report

Independent Auditor’s Report ............................................................................................................................ 1-2

Consolidated statement of financial position ......................................................................................................... 3

Consolidated statement of operations ................................................................................................................... 4

Consolidated statement of change in net debt ...................................................................................................... 5

Consolidated statement of cash flows ................................................................................................................... 6

Notes to the consolidated financial statements ................................................................................................ 7-24

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Management Report Year ended August 31, 2015 Re: Management’s Responsibility for the Consolidated Financial Statements The accompanying consolidated financial statements of the Toronto District School Board are the responsibility of the Board management and have been prepared in accordance with the Financial Administration Act, supplemented by Ontario Ministry of Education memorandum 2004:B2 and Ontario Regulation 395/11 of the Financial Administration Act, as described in Note 1(a) to the consolidated financial statements. The preparation of consolidated financial statements necessarily involves the use of estimates based on management’s judgment, particularly when transactions affecting the current accounting period cannot be finalized with certainty until future periods. Board management maintains a system of internal controls designed to provide reasonable assurance that assets are safeguarded, transactions are properly authorized and recorded in compliance with legislative and regulatory requirements, and reliable financial information is available on a timely basis for preparation of the consolidated financial statements. These systems are monitored and evaluated by management. The Audit Committee of the Board meets with management and the external auditors to review the consolidated financial statements and discuss any significant financial reporting or internal control matters prior to recommending approval of the consolidated financial statements. The consolidated financial statements have been audited by Deloitte LLP, independent external auditors appointed by the Board. The accompanying Independent Auditor’s Report outlines their responsibilities, the scope of their examination and their opinion on the Board’s consolidated financial statements.

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Deloitte LLP 5140 Yonge Street Suite 1700 Toronto ON M2N 6L7 Canada Tel: 416-601-6150 Fax: 416-601-6151 www.deloitte.ca

Independent Auditor’s Report To the Board of Trustees of The Toronto District School Board We have audited the accompanying consolidated financial statements of Toronto District School Board, which comprise the consolidated statement of financial position as at August 31, 2015 and the consolidated statements of operations, change in net debt and cash flows for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s Responsibility for the Consolidated Financial Statements Management is responsible for the preparation of these consolidated financial statements in accordance with the basis of accounting described in Note 1(a) to the consolidated financial statements, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified audit opinion.

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Basis for Qualified Opinion In common with many school boards, individual schools derive revenue from school fundraising activities held throughout the year. Adequate documentation and controls were not in place throughout the year to allow us to obtain satisfactory audit verification as to the completeness of these revenues. Accordingly, our verification of these revenues was limited to the amounts recorded in the records of the individual schools and we were not able to determine whether adjustments might be necessary to school fundraising revenue, annual surplus and cash flows from operating activities for the years ended August 31, 2015 and 2014, financial assets as at August 31, 2015 and 2014 and accumulated deficit as at September 1 and August 31 for both the 2015 and 2014 fiscal years. Our opinion on the consolidated financial statements for the year ended August 31, 2014 was modified accordingly because of the possible effects of this limitation in scope. Qualified Opinion In our opinion, except for the possible effect of the matter described in the Basis for Qualified Opinion paragraph, the consolidated financial statements of Toronto District School Board for the year ended August 31, 2015 are prepared, in all material respects, in accordance with the basis of accounting described in Note 1(a) to the consolidated financial statements. Emphasis of Matter Without modifying our opinion, we draw attention to Note 1(a) to the consolidated financial statements which describes the basis of accounting used in the preparation of these consolidated financial statements and the significant differences between such basis of accounting and Canadian public sector accounting standards.

Chartered Professional Accountants Licensed Public Accountants December 9, 2015

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Toronto District School BoardConsolidated statement of financial positionas at August 31, 2015(In thousands of dollars)

2015 2014$ $

Financial assetsCash 50,968 125,052 Due from City of Toronto 393,881 282,083 Accounts receivable (net of allowance of $8,631 (2014 - $6,684)) 29,807 22,192 Accounts receivable - Province of Ontario (Note 2) 452,405 505,062 Mortgage receivable (Note 3) 2,450 5,200 Funds on deposit (Note 4(f)) 114,312 112,702 Properties held for sale (Note 5) - 17

Total financial assets 1,043,823 1,052,308

LiabilitiesShort-term borrowing (Note 6) - 44,296 Accounts payable and accrued liabilities (Note 20) 217,914 206,218 Due to Province of Ontario 43,464 12,276 Accrued vacation pay 16,019 15,622 Deferred revenue (Note 7) 145,978 165,107 Deferred capital contributions (Note 8) 1,913,787 1,871,048 Retirement and other employee future benefits payable (Note 4) 426,202 442,621 Net long term debt (Note 9) 467,079 473,526

Total liabilities 3,230,443 3,230,714 Net debt (2,186,620) (2,178,406)

Non-financial assetsTangible capital assets (Note 10) 2,011,916 1,969,824 Prepaid expenses and supplies 8,581 6,823

Total non-financial assets 2,020,497 1,976,647 Accumulated deficit (Note 11) (166,123) (201,759)

Commitments and contingencies (Notes 12 and 13)

The accompanying notes to the consolidated financial statementsare an integral part of this financial statement.

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Toronto District School BoardConsolidated statement of operationsyear ended August 31, 2015(In thousands of dollars)

Budget 2015 2014$ $ $

RevenuesProvincial grants

Grants for student needs (Note 15) 2,773,268 2,758,637 2,581,251 Other 42,232 63,170 192,458

Federal grants and fees 25,000 21,497 22,601 Other fees and revenues 76,625 96,095 96,590 School fundraising 36,000 42,464 41,975 Amortization of deferred capital contributions 114,263 109,329 100,212

Total revenues 3,067,388 3,091,192 3,035,087

Expenses (Note 14)Instruction 2,391,778 2,396,101 2,347,156 Administration 81,765 93,470 85,701 Transportation 54,745 56,207 55,826 School operations and maintenance 321,731 323,388 324,819 Pupil accommodation 162,119 138,998 144,122 Other programs 2,050 3,955 2,997 School funded activities 36,000 42,412 41,982

Total expenses 3,050,188 3,054,531 3,002,603

Annual surplus 17,200 36,661 32,484 Accumulated deficit, beginning of year (Note 1(n)) (224,769) (202,784) (234,243) Accumulated deficit, end of year (207,569) (166,123) (201,759)

The accompanying notes to the consolidated financial statementsare an integral part of this financial statement.

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Toronto District School BoardConsolidated statement of change in net debtyear ended August 31, 2015(In thousands of dollars)

2015 2014$ $

Annual surplus 36,661 32,484 Acquisition of tangible capital assets (153,142) (166,850) Amortization of tangible capital assets 110,756 101,639 Write-off of pre-acquisition costs 294 - Net book value of tangible capital assets reclassified as

properties held for sale during the year (Note 5) - 4,842 (5,431) (27,885)

Acquisition of inventories of supplies (8,098) (7,900) Acquisition of prepaid expenses (6,149) (4,676) Consumption of inventories of supplies 7,821 8,103 Use of prepaid expenses 4,668 5,330 Change in net debt (7,189) (27,028) Net debt, beginning of year (Note 1(n)) (2,179,431) (2,151,378) Net debt, end of year (2,186,620) (2,178,406)

The accompanying notes to the consolidated financial statementsare an integral part of this financial statement.

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Toronto District School BoardConsolidated statement of cash flowsyear ended August 31, 2015(In thousands of dollars)

2015 2014$ $

Operating activitiesAnnual surplus 36,661 32,484 Items not involving cash

Amortization 110,756 101,639 Write-off of pre-acquisition costs 294 - Net book value of tangible capital assets reclassified as properties

held for sale during the year (Note 5) - 4,842 Net transfer from deferred capital contributions to

deferred revenue (Note 8) - (1,836) Deferred capital contributions recognized (Note 8) (109,329) (100,212)

Change in non-cash assets and liabilitiesDue from City of Toronto (111,798) (21,221) Accounts receivable (7,615) (889) Accounts receivable - Province of Ontario (1,440) 16,446 Prepaid expenses and supplies (1,758) 857 Properties held for sale 17 1,608 Accounts payable and accrued liabilities

and accrued vacation pay (net of liability for contaminated sites (Note 1(n)) 11,067 19,493

Due to Province of Ontario 31,188 (4,343) Deferred revenues - operating (1,775) (3,289) Retirement and other employee future benefits payable (16,419) (17,250)

(60,151) 28,330

Capital activityAcquisition of tangible capital assets (153,142) (166,850)

Investing activitiesRepayment of mortgage receivable 2,750 (500) Funds on deposit (1,610) (7,980)

1,140 (8,480)

Financing activitiesCapital grant contributions (Note 8) 152,068 191,098 Deferred revenue - capital (17,353) 44,640 Accounts receivable - Province of Ontario Capital 54,097 16,639 Short term borrowing - net (44,296) (29,341) Long-term debt repayments (21,482) (17,026) Issuance of long-term debt 15,035 18,656

138,069 224,666

Net increase (decrease) in cash (74,084) 77,665 Cash, beginning of year 125,052 47,387 Cash, end of year 50,968 125,052

The accompanying notes to the consolidated financial statementsare an integral part of this financial statement.

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Toronto District School Board Notes to the consolidated financial statements August 31, 2015 (Tabular amounts in thousands of dollars)

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1. Significant accounting policies

The consolidated financial statements are the representations of management and are prepared in accordance with the basis of accounting as described in Note 1a) below.

Significant accounting policies adopted are as follows:

(a) Basis of accounting

The financial statements have been prepared in accordance with the Financial Administration Act supplemented by Ontario Ministry of Education memorandum 2004:B2 and Ontario Regulation 395/11 of the Financial Administration Act.

The Financial Administration Act requires that the financial statements be prepared in accordance with the accounting principles determined by the relevant Ministry of the Province of Ontario. A directive was provided by the Ontario Ministry of Education within memorandum 2004:B2 requiring school boards to adopt Canadian public sector accounting standards commencing with their year ended August 31, 2004 and that changes may be required to the application of these standards as a result of regulation.

In 2011, the government passed Ontario Regulation 395/11 of the Financial Administration Act. The Regulation requires that contributions received or receivable for the acquisition or development of depreciable tangible capital assets and contributions of depreciable tangible capital assets for use in providing services, be recorded as deferred capital contributions and be recognized as revenue in the statement of operations over the periods during which the asset is used to provide service at the same rate that amortization is recognized in respect of the related asset. The regulation further requires that if the net book value of the depreciable tangible capital asset is reduced for any reason other than depreciation, a proportionate reduction of the deferred capital contribution along with a proportionate increase in the revenue be recognized. For Ontario school boards, these contributions include government transfers, externally restricted contributions and, historically, property tax revenue.

The accounting policy requirements under Regulation 395/11 are significantly different from the requirements of Canadian public sector accounting standards which require that:

Government transfers, including amounts previously recognized as tax revenue, which do not contain a stipulation that creates a liability, be recognized as revenue by the recipient when approved by the transferor and the eligibility criteria have been met in accordance with Canadian public sector accounting standard PS 3410; and

Externally restricted contributions be recognized as revenue in the period in which the resources are used for the purpose or purposes specified in accordance with Canadian public sector accounting standard PS 3100.

As a result, revenue recognized in the statement of operations and certain related deferred revenues and deferred capital contributions would be recorded differently under Canadian public sector accounting standards.

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Toronto District School Board Notes to the consolidated financial statements August 31, 2015 (Tabular amounts in thousands of dollars)

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1. Significant accounting policies (continued)

(b) Reporting entity

The consolidated financial statements reflect the assets, liabilities, revenues, and expenses of the reporting entity. The reporting entity includes all organizations which are controlled by the Toronto District School Board (the Board).

School generated funds, which include the assets, liabilities, revenues, and expenses of various organizations that exist at the school level and which are controlled by the Board are included in the consolidated financial statements.

The Board established the Toronto Lands Corporation (TLC) in 2008, a wholly owned subsidiary. Its mandate is to manage designated real estate holdings of the Board to maximize rental income and dispose of surplus sites. This entity which is controlled by the Board is included in the consolidated financial statements.

The Board is a unit owner in Toronto Standard Condominium Corporation No. 2234, which was established for the management of common elements (consisting of the separation walls, sprinkler system, and fire alarm system) of the property located at 840 Coxwell and 555 Mortimer Avenues, which is jointly owned by the Board and Toronto East General Hospital. The Board’s share of activities relating to this entity is included in the consolidated financial statements.

All inter-departmental and inter-entity transactions and balances between these organizations are eliminated on consolidation.

(c) Trust funds

Trust funds and their related operations administered by the Board amounting to $8.9 million (2014 - $9.0 million) are not included in the consolidated financial statements.

(d) Deferred revenue

Certain amounts are received pursuant to legislation, regulation or agreement and may only be used in the conduct of certain programs or in the delivery of specific services and transactions. These amounts will be recognized as revenue in the fiscal year the related qualifying expenditures are incurred or services are performed.

(e) Deferred capital contributions

Contributions received or receivable for the purpose of acquiring or developing a depreciable tangible capital asset for use in providing services, or any contributions in the form of depreciable tangible assets for use in providing services, is recognized as deferred capital contributions as defined in Ontario Regulation 395/11 of the Financial Administration Act. These amounts are recognized as revenue at the same rate as the related tangible capital asset is amortized. The following items fall under this category:

Government transfers received or receivable for capital purpose;

Other restricted contributions received or receivable for capital purpose; and

Amounts previously recognized as property taxation revenues which were historically used to fund capital assets.

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Toronto District School Board Notes to the consolidated financial statements August 31, 2015 (Tabular amounts in thousands of dollars)

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1. Significant accounting policies (continued)

(f) Retirement and other employee future benefits

The Board provides defined retirement and other future benefits to specified employee groups. These benefits include pension, health, sick leave credit gratuity, workers’ compensation and long-term disability benefits. The Board has adopted the following policies with respect to accounting for these employee benefits:

(i) The costs of self-insured retirement and other employee future benefit plans are actuarially determined using management’s best estimate of salary escalation, accumulated sick days at retirement, insurance and health care cost trends, disability recovery rates, long-term inflation rates and discount rates. The cost of retirement gratuities are actuarially determined using the employee’s salary, banked sick days and years of service as at August 31, 2012 and management’s best estimate of discount rates. Any actuarial gains and losses arising from changes to the discount rate are amortized over the expected average remaining service life of the employee group.

For self-insured retirement and other employee future benefits that vest and accumulate over the periods of service provided by employees, such as life insurance and health care benefits for retirees, the cost is actuarially determined using the projected benefits method prorated on service. Under this method, the benefit costs are recognized over the expected average service life of the employee group.

For those self-insured benefit obligations that arise from specific events that occur from time to time, such as obligations for workers’ compensation, long-term disability and life insurance and health care benefits for those on disability leave, the cost is recognized immediately in the period the events occur. Any actuarial gains and losses that are related to these benefits are recognized immediately in the period they arise.

(ii) The Board’s contributions to multi-employer defined benefit pension plans, such as the Ontario Municipal Employees Retirement System (OMERS) pensions, are recorded in the period in which they become payable.

(iii) The costs of insured benefits for active employees reflected in these consolidated financial statements are the Board’s portion of insurance premiums owed for coverage of employees during the period.

(g) Tangible capital assets

Tangible capital assets are recorded at cost which includes the costs directly related to the acquisition, design, construction, development, improvement or betterment of tangible capital assets. Cost includes overheads directly attributable to construction and development.

Leases which transfer substantially all of the benefits and risks incidental to ownership of property are accounted for as leased tangible capital assets. All other leases are accounted for as operating leases and the related payments are charged to expenses as incurred.

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Toronto District School Board Notes to the consolidated financial statements August 31, 2015 (Tabular amounts in thousands of dollars)

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1. Significant accounting policies (continued)

(g) Tangible capital assets (continued)

Tangible capital assets, except land, are amortized on a straight-line basis over the estimated useful life of the assets. Amortization rates are as follows:

Asset class Estimated useful life

Buildings 40 yearsOther buildings 20 yearsPortable structures 20 yearsLand improvements with finite lives 15 yearsFirst time equipping of schools 10 yearsFurniture 10 yearsEquipment 5-15 yearsComputer hardware 5 yearsComputer software 5 yearsVehicles 5-10 yearsLeasehold improvement Over the lease term

Assets under construction are not amortized until the asset is available for productive use. Land permanently removed from service and held for resale is recorded at the lower of cost and net realizable value. Cost includes amounts to prepare the land for sale or servicing. Buildings permanently removed from service and held for resale cease to be amortized and are recorded at the lower of carrying value and net realizable value. These assets are recorded as “properties held for sale” on the consolidated statement of financial position.

Works of art and historic artifacts are not recorded as assets in these consolidated financial statements.

(h) Government transfers

Government transfers, which include legislative grants, are recognized in the consolidated financial statements in the period in which events giving rise to the transfer occur, providing the transfers are authorized, all eligibility criteria have been met and reasonable estimates of the amount can be made. If government transfers contain stipulations which give rise to a liability, they are deferred and recognized in revenue when the stipulations are met.

Government transfers for capital are deferred as required by Regulation 395/11, recorded as deferred capital contributions and recognized as revenue in the consolidated statement of operations at the same rate and over the same periods as the asset is amortized.

(i) Investment income

Investment income is reported as revenue in the period earned.

Interest income earned on monies invested specifically for externally restricted funds is added to the fund balance and forms part of the respective deferred revenue balances.

(j) Long term debt

Long term debt includes debentures and Ontario Financing Authority (OFA) loans which were arranged for financing Board’s capital projects or high priority renewal projects. Long term debt is recorded net of related sinking fund balances.

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Toronto District School Board Notes to the consolidated financial statements August 31, 2015 (Tabular amounts in thousands of dollars)

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1. Significant accounting policies (continued)

(k) Budget figures

Budget figures have been provided for comparison purposes and have been derived from the budget approved by the Trustees. The budget approved by the Trustees is developed in accordance with the provincially mandated funding model for school boards and is used to manage program spending within the guidelines of the funding model.

(l) Use of estimates

The preparation of financial statements in conformity with the basis of accounting described in Note 1a) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the year. Estimates are reviewed periodically by management and, as adjustments become necessary, they are reported in the period in which they became known. Accounts subject to estimates include allowance for doubtful accounts receivable, certain accrued liabilities including legal claims and pay equity accruals, employee future benefits, useful lives of tangible capital assets and the recognition of deferred amounts related to capital contributions. Actual results could differ from these estimates.

(m) Property Tax Revenue

Under Public Sector Accounting Standards, the entity that determines and sets the tax levy records the revenue in the financial statements, which in the case of the Board, is the Province of Ontario. As a result, property tax revenue received from the municipalities is recorded as part of Provincial Legislative Grants.

(n) Changes in Accounting Policies

The Board has implemented Public Sector Accounting Board (“PSAB”) section 3260 Liability for contaminated sites. Section 3260 requires governments and government organizations to record a liability in their financial statements if they have a contaminated site that meets the requirements set out in the standard. The standard defines contamination as the introduction into air, soil, water or sediment of a chemical, organic or radioactive material or live organism that exceeds an environmental standard. The standard generally applies to sites that are not in productive use. Sites that are in productive use are only considered contaminated if there was an unexpected event that resulted in contamination. The adoption of this standard has been applied retroactively without the restatement of prior periods.

The impact of the change in accounting policy is as follows: $

Accumulated deficit, August 31, 2014 201,759 Liability for contaminated sites, September 1, 2014 (1,025) Accumulated deficit, September 1, 2014 202,784

$

Net debt, August 31, 2014 2,178,406 Liability for contaminated sites, September 1, 2014 (1,025) Net debt, September 1, 2014 2,179,431

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Toronto District School Board Notes to the consolidated financial statements August 31, 2015 (Tabular amounts in thousands of dollars)

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2. Accounts receivable - Province of Ontario

The account receivable from the Province of Ontario is comprised mainly of amounts related to capital grants in the amount of $451 million (2014 - $505.1 million).

The Province of Ontario has replaced variable capital funding with a one-time debt support grant. The Board recorded a one-time grant that recognizes capital debt as of August 31, 2010 that is supported by the existing capital programs. The Board will receive this grant in cash over the remaining term of the existing capital debt instruments. The Board may also receive yearly capital grants to support capital programs which would be reflected in this account.

3. Mortgage receivable

2015 2014$ $

Mortgage relating to the sale of Alderwood Public School,Principal of 2.25 million repaid on November 14, 2014and the remainder paid subsequent to year end. 2,450 4,700

Mortgage relating to the sale of Pine River Outdoor Education Centre,due June 30, 2015 - 500

Total 2,450 5,200

4. Retirement and other employee future benefits

(a) A brief overview of the Board’s benefit plans is set out below.

Pension benefits

(i) Supplementary War Veterans Allowance

The Supplementary War Veterans Allowance Plan (the “Plan”) consists of allowances to be paid to retired employees of the former Board of Education for the City of Toronto. The Plan is closed to new members. The Plan includes survivor benefits of 66 2/3% for the surviving spouse. The pension is subject to indexing at 100% of the increase in CPI. This Plan is unfunded. The benefit costs and liability related to this plan are recorded in the Board’s consolidated financial statements.

Retirement benefits

(i) Sick leave credit gratuities

The Board provides retirement gratuities to certain groups of employees hired prior to specified dates. The Board provides these benefits through an unfunded defined benefit plan. The benefit costs and liabilities related to this plan are recorded in the Board’s consolidated financial statements. The amount of the gratuities payable to eligible employees at retirement is based on their salary, accumulated sick days, and years of service at August 31, 2012.

(ii) Retirement life insurance and health care benefits

Employees are able to continue coverage for life insurance, dental and health care benefits after retirement until the members reach 65 years of age; however, the retirees pay the full premium associated with this coverage. For those employees retiring before September 1, 2004 the premiums are partially subsidized by the Board, as the retirees are in the same experience group as the active employees. These future benefits are unfunded. All retirees on or after September 1, 2004 are not subsidized by the Board.

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Toronto District School Board Notes to the consolidated financial statements August 31, 2015 (Tabular amounts in thousands of dollars)

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4. Retirement and other employee future benefits (continued)

(a) Overview of the Board’s benefit plans (continued)

(i) Workplace safety and insurance board obligations

The Board is a Schedule 2 employer under the Workplace Safety and Insurance Act and, as such, assumes responsibility for the payment of all claims to its injured workers under the Act. The Board does not fund these obligations in advance of payments made under the Act. The benefit costs and actuarially determined liabilities related to this plan based on management’s best estimate are recorded in the Board’s consolidated financial statements. Plan changes made in 2012 require school boards to provide salary top-up to a maximum of 4 ½ years for employees receiving payments from the Workplace Safety and Insurance Board, where the previously negotiated collective agreement included such provision.

(ii) Long-term disability benefits

The Board provides long term disability insurance coverage for non-teaching employees. The benefit costs and actuarially determined liabilities related to this plan are included in the Board’s consolidated financial statements. The Board has an internally restricted reserve to fund these liabilities.

Teaching staff have their own long term disability plans through their Federations and are responsible for the entire cost. Accordingly, no costs or liabilities related to these plans are included in the Board’s consolidated financial statements.

The Board provides life insurance, dental and health care benefits to employees on long-term disability leave for a period of two years after the date of disability. The insurance carriers waive the life insurance premiums for employees on long-term disability; however, the Board and employee are responsible for the payment of the costs of health care benefits under this plan under the same cost-sharing arrangements to which the employee would be entitled as an active employee. Continuation of dental coverage is also available subject to the employee paying the full cost.

(iii) Sick Leave Top up Benefits

A maximum of 11 unused sick leave days from the current year may be carried forward into the following year only, to be used to top-up salary for illnesses paid through the short term leave and disability plan in that year.

(b) Retirement and other employee future benefits liabilities

Pension Retirement Otherbenefits benefits benefits Total

$ $ $ $

Accrued benefit obligationBalance, beginning of year 4,398 290,907 148,039 443,344 Employer current service cost -

net of employee contribution - - 11,988 11,988 Interest cost 123 8,374 4,297 12,794 Benefit paid (568) (23,582) (19,021) (43,171) Actuarial gains (losses) 22 (1,472) 35 (1,415)

Balance, end of year 3,975 274,227 145,338 423,540

Unfunded accrued benefit obligation 3,975 274,227 145,338 423,540 Unamortized net actuarial gains - 2,662 - 2,662

Accrued benefit liability 3,975 276,889 145,338 426,202

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Toronto District School Board Notes to the consolidated financial statements August 31, 2015 (Tabular amounts in thousands of dollars)

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4. Retirement and other employee future benefits (continued)

(b) Retirement and other employee future benefits liabilities (continued)

2014Pension Retirement Otherbenefits benefits benefits Total

$ $ $ $

Accrued benefit obligationBalance, beginning of year 4,845 302,331 143,933 451,109 Employer current service cost

net of employee contribution - - 17,203 17,203 Interest cost 148 8,982 4,737 13,867 Benefit paid (601) (25,081) (18,767) (44,449) Actuarial losses 7 4,676 931 5,614 Balance, end of year 4,399 290,908 148,037 443,344

Unfunded accrued benefit obligation 4,399 290,908 148,037 443,344 Unamortized net actuarial gains (losses) - 482 (1,205) (723) Accrued benefit liability 4,399 291,390 146,832 442,621

(c) Retirement and other employee future benefits expenses

2015Pension Retirement Otherbenefits benefits benefits Total

$ $ $ $

Current year benefit costs - - 11,988 11,988 Interest on accrued benefit obligation 123 8,373 4,297 12,793 Recognition of actuarial losses (gains) 22 708 1,241 1,971 Employee future benefits expenses 145 9,081 17,526 26,752

2014

Pension Retirement Otherbenefits benefits benefits Total

$ $ $ $

Current year benefit costs - - 17,203 17,203 Interest on accrued benefit obligation 148 8,982 4,737 13,867 Recognition of actuarial losses (gains) 7 (448) (3,429) (3,870) Employee future benefits expenses 155 8,534 18,511 27,200

These amounts are included in the respective expense categories on the consolidated statement of operations.

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Toronto District School Board Notes to the consolidated financial statements August 31, 2015 (Tabular amounts in thousands of dollars)

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4. Retirement and other employee future benefits (continued)

(d) Actuarial assumptions

The accrued benefit obligations for employee future benefit plans as at August 31, 2015 are based on the most recent actuarial valuations completed for accounting purposes as at August 31, 2015 These valuations take into account the plan changes and the economic assumptions used in these valuations are the Board’s best estimates of expected rates of:

2015 2014% %

Estimated inflationHealth 8.25 7.90

Dental 4.25 4.50 War veterans 1.50 2.10 WSIB 2.00 1.00 LTDI 1.00 1.00

Wages and salary calculation 0.00 0.00Discount on accrued benefit obligations

Sick leave credit gratuity 2.45 3.00 Life, health and dental 2.45 3.00 War veterans 2.45 3.00 WSIB 2.85 3.00 LTDI 2.45 3.00 Sick leave accumulation N/A N/A

(e) Multi-employer pension plans

(i) Ontario Teachers’ Pension Plan

Teachers and related employee groups are eligible to be members of Ontario Teachers’ Pension Plan, a multi-employer pension plan. Employer contributions for these employees are provided directly by the Province of Ontario. The pension costs and obligations related to this plan are a direct responsibility of the Province. Accordingly, no costs or liabilities related to this plan are included in the Board’s consolidated financial statements.

(ii) Ontario Municipal Employees Retirement System

Non-teaching employees of the Board are eligible to be members of the Ontario Municipal Employees Retirement System, a multi-employer pension plan. The plan provides defined pension benefits to employees based on their length of service and rates of pay. The Board’s contributions equal the employees’ contributions to the Plan. During the year ended August 31, 2015, the Board contributed $50.1 million (2014 - $48.5 million) to the plan. As this is a multi-employer pension plan, these contributions are the Board’s pension benefit expenses and are included in the respective expense categories on the consolidated statement of operations. No pension liability for this type of plan is included in the Board’s consolidated statement of financial position.

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4. Retirement and other employee future benefits (continued)

(f) Funds held on deposit for employee benefit plans are represented by the following:

(i) Health and dental funds on deposit

The Board has funds held on deposit with Sunlife and Manulife to fund current liabilities for the health and dental plans of the Board in the amount of $25.5 million (2014 - $26.5 million). These funds primarily cover estimated current period claims yet to be submitted by employees.

(ii) Group Life Funds on Deposit

The Board has funds held on deposit with Great West Life to fund current liabilities for the group life insurance plans of the Board in the amount of $ 10.1 million ($2014 - $10.8 million).

(iii) Long term disability funds on deposit

The Board has funds held on deposit with Sunlife and CIBC to fund the long term disability plan of the Board in the amount of $78.7 million (2014 - $75.3 million). These funds primarily cover the actuarially determined liabilities of the Plan and cover reduced Board premiums otherwise required by the Plan.

5. Properties held for sale

As of August 31, 2015, $ Nil (2014 - $Nil) related to buildings and $ Nil (2014 - $0.02 million) related to land were recorded as properties held for sale (PHFS). The net book value of properties reclassified to properties held for sale during the year was $Nil (2014 - $4.8 million). Net proceeds of $0.18 million (2014 - $94.9 million) were received on the sale of these properties, which had a carrying value of $0.02 million (2014 - $6.4 million), resulting in a gain on sale of $0.16 million (2014 - $88.5 million). The proceeds from the sale of these properties have been used to fund in-year capital projects, as well as $0.57 million recognized as revenue mainly to fund sale costs, with an amount remaining in deferred revenue of $77.5 million, in accordance with Ontario Regulation 193/10.

6. Short-term borrowing

2015 2014$ $

95 day Bankers Acceptances bearing interest at 2.02% maturing on September 30, 2014 - 44,296

The Board has incurred short term borrowing at August 31, 2015 in the amount of $Nil (2014 - $44.3 million) to provide interim financing for various capital programs.

The Ministry funds the interest cost incurred on the short term financing. Further, the Ministry will periodically arrange for the permanent financing, under a long term financing arrangement (see also Note 9 (d), (e), (f), (g), (h), (I), (j), (k) and (l)).

The Board has a $50 million line of credit with a Canadian chartered bank for operating purposes. The amount outstanding as at August 31, 2015 was $Nil (2014 - $Nil).

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7. Deferred revenue

The continuity of deferred revenue including those set aside for specific purposes by legislation, regulation or agreement as at August 31, 2015 is as follows:

Externally Transferrestricted Revenue to/(from)

Balance, revenue and recognized deferred Balance,August 31, investment in the capital August 31,

2014 income period contributions 2015$ $ $ $ $

Special Education 2,880 332,132 334,129 - 883 Other Ministry of Education grants 2,652 30,016 30,672 - 1,996 Other Provincial grants 2,346 31,690 32,497 - 1,539 Tuition fees 18,165 20,066 19,906 - 18,325 Other (operation) 5,827 39,475 37,950 - 7,352 Minor tangible capital assets - 68,771 61,360 7,411 - School renewal 12,635 45,432 8,457 36,200 13,410 Interest on capital - 24,520 24,520 - - Temporary accommodation - 1,440 - 1,440 - School condition improvement 8,884 29,364 516 24,089 13,643 Retrofitting school space for

child care 13,668 180 - 3,827 10,021 Renewable energy 244 - - 244 Ministry of Health - Pool grants 31 - - - 31 Proceeds of disposition 96,944 - - 19,103 77,841 Proceeds of disposition - PHFS - 180 570 - (390) Other 831 24,738 - 24,486 1,083 Total 165,107 648,004 550,577 116,556 145,978

8. Deferred capital contributions

Deferred capital contributions include grants and contributions received that are used for the acquisition of tangible capital assets in accordance with Regulation 395/11 that have been spent by year end. The contributions are amortized into revenue at the rate used to amortize the related asset over its useful life.

2015 2014$ $

Balance, beginning of year 1,871,048 1,781,998 Additions to deferred capital contributions 152,068 191,098 Revenue recognized in the period (109,329) (10,212) Transfers to deferred revenue relating to properties held for sale - (1,836) Balance, end of year 1,913,787 1,961,048

Additions to deferred capital contributions includes net proceeds from disposition of properties held for sale in the amount of $0.2 million (2014 - $24.2 million).

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9. Net long-term debt

(a) Net long-term debt reported in the consolidated statement of financial position is comprised of the following:

Interest Maturityrate date 2015 2014

% $ $

Critical renewal debenture Note 9(b) 5.07 December 17, 2024 23,934 25,853 Sinking Fund (City of Toronto) Note 9(c) 6.10 December 12, 2017 75,846 75,846 Less: sinking fund assets Note 9(c) - - (60,815) (54,545) Ontario Financing Authority Note 9(d) 4.56 November 15, 2031 83,630 86,970 Ontario Financing Authority Note 9(e) 4.90 March 3, 2033 85,302 88,251 Ontario Financing Authority Note 9(f) 5.06 March 13, 2034 75,569 77,927 Ontario Financing Authority Note 9(g) 5.23 April 13, 2035 47,772 49,111 Ontario Financing Authority Note 9(h) 4.83 March 11, 2036 43,895 45,097 Ontario Financing Authority Note 9(i) 3.59 March 9, 2037 22,346 23,014 Ontario Financing Authority Note 9(j) 3.66 June 25, 2038 36,359 37,346 Ontario Financing Authority Note 9(k) 4.00 March 11, 2039 18,206 18,656 Ontario Financing Authority Note 9(l) 2.99 March 9, 2040 15,035 - Balance as at August 31 467,079 473,526

(b) On December 17, 2004 the Board issued a $40 million debenture to fund an equivalent amount of

major renovation projects. The debenture bears interest at 5.071% and has a 20-year amortization with semi-annual interest and principal payments of $1.6 million. The annual debt service of $3.2 million is funded from the annual Facility Renewal Grant.

(c) City of Toronto Debenture in the amount of $75.8 million maturing December 12, 2017, with an interest rate of 6.1%. Sinking fund assets in the amount of approximately $60.8million (2014 - $54.5 million) have been set aside to retire the long-term City of Toronto debenture. The market value of sinking fund assets as at August 31, 2015 was $70.0million (2014 - $63.7 million).

(d) On November 15, 2006, the Board entered into a loan agreement with the Ontario Financing Authority to finance $107.7 million of the GPL program. The loan is repayable by semi-annual installments of principal and interest of $3.6 million based on a 25 year amortization schedule and bears interest of 4.56%. The annual principal and interest costs are funded by the Ministry of Education.

(e) On March 3, 2008, the Board entered into a loan agreement with the Ontario Financing Authority to finance $103.2 million (GPL of $93.9 million and PCS of $9.3 million). The loan is repayable by semi-annual installments of principal and interest of $3.6 million based on a 25 year amortization schedule and bears interest of 4.90%. The annual principal and interest costs are funded by the Ministry of Education.

(f) On March 13, 2009, the Board entered into a loan agreement with the Ontario Financing Authority to finance $88.1 million (GPL of $81.1 million and PCS of $7.0 million). The loan is repayable by semi-annual installments of principal and interest of $3.1 million based on a 25 year amortization schedule and bears interest of 5.06%. The annual principal and interest costs are funded by the Ministry of Education.

(g) On April 14, 2010, the Board entered into a loan agreement with the Ontario Financing Authority to finance $53.8 million (GPL of $51.7 million and PCS of $2.1 million). The loan is repayable by semi-annual installments of principal and interest of $1.9 million based on a 25 year amortization schedule and bears interest of 5.23%. The annual principal and interest costs are funded by the Ministry of Education.

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9. Net long-term debt (continued)

(h) On March 11, 2011, the Board entered into a loan agreement with the Ontario Financing Authority to finance $48.4 million (GPL of $33.9 million and PCS of $14.5 million). The loan is repayable by semi-annual installments of principal and interest of $1.7 million based on a 25 year amortization schedule and bears interest of 4.83%. The annual principal and interest costs are funded by the Ministry of Education.

(i) On March 9, 2012, the Board entered into a loan agreement with the Ontario Financing Authority to finance $24.3 million (GPL of $23.9 million and PCS of $0.4 million). The loan is repayable by semi-annual installments of principal and interest of $0.7 million based on a 25 year amortization schedule and bears interest of 3.59%. The annual principal and interest costs are funded by the Ministry of Education.

(j) On June 26, 2013, the Board entered into a loan agreement with the Ontario Financing Authority to finance $37.8 million (GPL of $21.2 million and Capital Enveloping (ARC) of $16.6 million). The loan is repayable by semi-annual installments of principal and interest of $1.2 million based on a 25 year amortization schedule and bears interest of 3.66%. The annual principal and interest costs are funded by the Ministry of Education.

(k) On March 12, 2014, the Board entered into a loan agreement with the Ontario Financing Authority to finance $18.7 million (Prohibit to Repair of $14.1 million and Capital Priority Program of $4.6 million). The loan is repayable by semi-annual installments of principal and interest of $0.6 million based on a 25 year amortization schedule and bears interest of 4.003%. The annual principal and interest costs are funded by the Ministry of Education.

(l) On March 11, 2015, the Board entered into a loan agreement with the Ontario Financing Authority to finance $15.0 million (Primary Class Size of $3.6million and Capital Priority Program of $11.4 million). The loan is repayable by semi-annual installments of principal and interest of $0.4 million based on a 25 year amortization schedule and bears interest of 2.993%. The annual principal and interest costs are funded by the Ministry of Education.

(m) Principal and sinking fund payments relating to net long-term liabilities of $458.9 million (2014 - $461.4 million) outstanding as at August 31, 2015 are due as follows:

Principal and sinkingfund contributions Interest Total

$ $ $

2016 18,650 25,397 44,047 2017 19,426 24,621 44,047 2018 20,239 21,495 41,734 2019 18,797 18,329 37,126 2020 19,691 17,436 37,127 Thereafter 362,128 133,407 495,535

458,931 240,685 699,616

In addition, debenture interest on sinking fund contributions estimated to amount to approximately $8.1 million is expected to be earned during the remaining life of the City of Toronto debenture. This interest together with the sinking fund contributions will fund the total outstanding City of Toronto debenture principal of $75.8 million.

(n) Interest on long-term debt amounted to $25.3 million (2014 - $25.3 million).

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10. Tangible capital assets

(a) Opening and closing balances with activities for the year ended August 31, 2015

Net book Net book

Gross book value Accumulated amortization value value

Balance at Transfers Transfers Balance at Balance at Transfers Balance at Balance at Balance at

September 1, to/from to held August 31, September 1, to held Disposals, August 31, August 31, September 1,

2014 Additions CIP for sale Disposal 2015 2014 Amortization for sale write-offs 2015 2015 2,014

$ $ $ $ $ $ $ $ $ $ $ $ $

Land 74,513 780 - - - 75,293 - - - - - 75,293 74,513

Land improvements 71,626 8,322 - - - 79,948 25,308 5,722 - - 31,030 48,918 46,318

Buildings (40 years) 2,918,029 122,296 1,779 - - 3,042,104 1,132,513 92,959 - - 1,225,472 1,816,632 1,785,516

Buildings (20 years) 22 - - - - 22 1 1 - - 2 20 21

Portable structures 31,537 1,507 - - - 33,044 8,062 1,635 - - 9,697 23,347 23,475

Construction in

Progress (CIP) 6,717 12,420 (1,588) - - 17,549 - - - - - 17,549 6,717

Pre-acquisition building 610 - (191) - (294) 125 - - - - - 125 610

Equipment (5 years) 6,680 18 - - (3,532) 3,166 4,933 1,275 - (3,532) 2,676 490 1,747

Equipment (10 years) 4,170 435 - - (978) 3,627 2,372 422 - (978) 1,816 1,811 1,798

Equipment (15 years) 3,344 - - - - 3,344 1,923 202 - - 2,125 1,219 1,421

First time equipping

(10 years) 7,102 246 - - - 7,348 1,861 721 - - 2,582 4,766 5,241

Furniture (10 years) 1,185 41 - - (116) 1,110 642 114 - (116) 640 470 543

Computer hardware 29,846 5,450 - - (4,718) 30,578 15,161 5,885 - (4,718) 16,328 14,250 14,685

Computer software 2,397 1,039 - - (516) 2,920 1,153 539 - (516) 1,176 1,744 1,244

Vehicles

(< 10,000 pounds) 2,108 - - - - 2,108 1,347 204 - - 1,551 557 761

Vehicles

(> 10,000 pounds) 4,700 428 - - - 5,128 3,815 228 - - 4,043 1,085 885

Leasehold

improvement - building 5,519 160 - - - 5,679 1,486 816 - - 2,302 3,377 4,033

Leasehold

improvement - land 379 - - - - 379 83 33 - - 116 263 296

3,170,484 153,142 - - (10,154) 3,313,472 1,200,660 110,756 - (9,860) 1,301,556 2,011,916 1,969,824

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10. Tangible capital assets (continued)

(b) Works of art and historic artifacts

TDSB has an art collection in its possession with an insured value of $7.4 million (2014 - $7.4 million). In addition, TDSB also has a number of historic artifacts. In accordance with public sector accounting standards, these works of art and historic artifacts are not recorded as an asset in these consolidated financial statements.

11. Accumulated deficit

Accumulated deficit consists of the following:

2015 2014$ $

Accumulated deficitWorking funds 16,633 9,602 Reserves and reserve funds 136,981 132,825 Employee future benefits (404,228) (428,848) Interest accrual (7,027) (7,065) School generated funds 17,249 17,196 Capital grants used on land purchases 75,294 74,531 Liability for contaminated sites (1,025) -

(166,123) (201,759)

Internal reserves and reserve funds set aside for specific purposes by the Board of Trustees consist of the following:

2015 2014$ $

Special education 736 698 Employee benefit plans 99,960 99,230 School support 17,741 18,316 Sinking fund interest 14,684 12,136 Sinking fund asset provision 595 - Other 3,265 2,445

136,981 132,825

12. Contractual obligations and commitments

(a) Capital, facility renewals and renovations

The Board’s commitments for approved capital and facility renewal programs as of August 31, 2015 amounted to $28.3 million (2014 - $38.3 million).

(b) Other significant obligations

(i) The Board awarded contracts for student transportation, extended to August 31, 2016. The estimated annual commitment under these contracts is $50.2 million (2014 - $48.1 million).

(ii) The Board is committed to purchase natural gas including transportation through supply contracts with various expiry dates; the latest contract expires on October 31, 2016. The estimated outstanding costs of these contracts are $11.3 million (2014 - $1.7 million).

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12. Contractual obligations and commitments (continued)

(b) Other significant obligations (continued)

(iii) The Board is committed to a Wide Area Network contract which expires December 2020. The estimated annual commitment under this contract is $6.0 million (2014 - $5.0 million).

(iv) The Board is committed to a Multi-Functional Devices contract which expires October 2019. The estimated annual commitment under the contract is $2.9 million.

(v) TDSB and School Solar Limited Partnership (SSLP) entered into a Project Agreement on May 18, 2011 and amended on February 3, 2014. The Agreement involves SSLP providing roof replacements to approximately 4 million square feet of roofs, in return for the right to install solar panels on school roofs and benefit from the associated Feed-in Tariff (“FIT”) contracts over a 20-year period. Roof betterment projects will be capitalized at cost as completed, with a corresponding increase in deferred capital contributions in accordance with Ontario Regulation 395/11. During fiscal 2015, approximately 2.2 million square feet of roof betterments were completed and capitalized at a cost of $21.2 million.

13. Contingent liabilities

Legal claims

The Board has been named as the defendant in certain legal actions, in which damages have been sought. Any losses arising from these actions are recorded in the year that the related litigation is settled or when any likely amounts are measurable. Where the outcomes of actions are not determinable as at August 31, 2015, no provision is made in the consolidated financial statements.

Pay equity

The Board is continuing to negotiate several pay equity claims with employee groups. Management records any future pay equity settlements in the year in which the claim is settled, or earlier, if the amount is determined to be likely and the liability is measurable.

14. Expenses by object

The following is a summary of the expenses reported on the consolidated statement of operations by object:

2015 2014$ $

ExpensesSalary and wages 2,219,500 2,194,986 Employee benefits 335,351 324,992 Staff development 2,049 2,256 Supplies and services 187,717 182,154 Interest 25,768 26,588 Rental expenses 13,708 15,504 Fees and contract services 103,337 108,063 Other 13,639 4,439 Amortization of tangible capital assets 111,050 101,639 School activities expenditures 42,412 41,982

3,054,531 3,002,603

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15. Grants for student needs

Included in grants for student needs is an amount of $1.440 billion (2014 - $1.461 billion) raised through local property taxation by the Province and transferred to the Board.

16. Ontario School Board Insurance Exchange (OSBIE)

The Board participates for its liability, property and automobile insurance in the Ontario School Boards’ Insurance Exchange (OSBIE), a reciprocal insurance company licensed under the Insurance Act that is funded by the member boards across Ontario. Liability insurance is available to a maximum of $24 million per occurrence.

The ultimate premiums over a five year period are based on both the reciprocals and the Board’s actual claims experience. Periodically, the Board may receive a refund or be asked to pay an additional premium based on its pro rata share of claims experience. The current five year term expires in December 2016.

17. Repayment of “55 School Board Trust” funding

On June 1, 2003, the Board received $275.1 million from the “55 School Board Trust” for its capital related debt eligible for provincial funding support pursuant to a 30-year agreement it entered into with the trust. The “55 School Board Trust” was created to refinance the outstanding not permanently financed (NPF) debt of participating boards who are beneficiaries of the trust. Under the terms of the agreement, the “55 School Board Trust” repaid the board’s debt in consideration for the assignment by the Board to the trust of future provincial grants payable to the Board in respect of the NPF debt.

The flow-through of $20.5 million (2014 - $20.5 million) in grants in respect of the above agreement for the year ended August 31, 2015, is not recorded in these consolidated financial statements.

18. Financial contribution agreements

During 2001-2002, the Board established three joint trust accounts with the Toronto Catholic District School Board pertaining to Education Development Levy Agreements. These Agreements pertain to building developments that pre-date the passing of the Education Development Charges provisions of the Education Act. The total levy amount in these joint trust accounts as at August 31, 2015 is $64.6 million (2014 - $64.8 million). The Board’s financial interest in these joint trust accounts has not been reflected in the consolidated statement of financial position, as the amounts are determined jointly and will be apportioned at the time the funds are required for school construction. These funds must be used for construction of school facilities in specific designated areas of the City of Toronto.

19. Transportation consortium

In 2011, the Board entered into an agreement with the Toronto Catholic District School Board in order to provide common administration of student transportation in the City. This agreement was executed in an effort to increase delivery efficiency and cost effectiveness of student transportation for each of the Boards. Under the agreement, decisions related to the financial and operating activities of Toronto Transportation group are shared. No partner is in a position to exercise unilateral control.

The Board’s portion of transportation expenses has been included in the consolidated statement of operations.

20. Liability for contaminated sites

A liability for contaminated sites was recorded due to impacts from polycyclic aromatic hydrocarbon and cyanide at one property and conductivity (salt) impact at a second property. The liability was estimated based on a baseline phase II environmental site assessment performed by an environmental consulting firm. The estimated liability is $1.025 million, and is included in accounts payable and accrued liabilities in the consolidated statement of financial position. No recoveries are expected.

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21. Subsequent events

Subsequent to August 31, 2015, The Provincial ETFO and OSSTF teachers unions and provincial CUPE workers and central employer bargaining agent ratified agreements at the central level which include a voluntary retirement gratuity early payout provision. This provision may have a future impact on the board’s employee future benefit liability. There is no impact to the 2014-15 fiscal year. To be effective, the collective agreements must be ratified at both the central and local level. At the reporting date of these financial statements, local ratification has not occurred with any union group.

The voluntary retirement gratuity early payout provision provides eligible employees with the option of receiving a discounted frozen retirement gratuity benefit payment on August 31, 2016. The voluntary retirement gratuity early payout provision may result in payouts occurring earlier than anticipated and generally at a discount to August 31, 2015 financial statement carrying values. As a result, the reduction in the liability for those members who take the voluntary retirement gratuity early payout option will be accompanied by actuarial gains or losses in the board’s 2015-16 year financial statements. At this time, the change in the liability cannot be estimated as there are no collective agreements in effect and eligible employees have yet to declare their participation in the voluntary retirement gratuity early payout option.